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Montreal Gazette
a day ago
- Business
- Montreal Gazette
Kheiriddin: Carney will have no choice but to kill supply management
For a while there, things were going so well. Prime Minister Mark Carney — a.k.a. 'the Trump whisperer' — had morphed from critic to texting buddy of the U.S. president. Over the past three months, Carney had been chatting with Donald Trump, building backchannel goodwill. After the successful G7 summit in Kananaskis, Alta., hopes were high that Ottawa would strike a deal with Washington in 30 days, and that the rhetoric of making us the '51st state' had finally been retired. Until Friday, when everything fell apart. That's when Trump abruptly cut off trade negotiations with Canada over our three per cent digital services tax, set to take effect June 30. Aimed at U.S. tech giants Amazon, Meta, Google and Airbnb, the tax was retroactive to 2022 and would have cost them an estimated $2 billion in back payments. The tech bros howled, the president barked and Carney blinked. Sunday night, he backed down and cancelled the tax: Monday morning, U.S. Commerce Secretary Howard Lutnick thanked him for the climbdown, as did the Canadian Chamber of Commerce. Negotiations were back on. But if you thought that was the last bump in the road, you couldn't be more wrong. In an interview broadcast Sunday morning on Fox News, Trump mentioned a veritable mountain: supply management. That's the system that protects Canadian dairy, poultry and egg industries from foreign competition through quotas and tariffs, including Trump's favourite bugaboo, a 200-plus per cent markup on U.S. dairy products. It's true that the tariff only kicks in after the U.S. exports 50,000 zero-tariff metric tons of milk and 12,500 metric tons of cheese per year — levels it is nowhere near approaching. But supply management was already a sticking point with Trump in the CUSMA negotiations under then-PM Justin Trudeau, and Republican lawmakers and U.S. dairy producers continue to demand its elimination. In our country, unfortunately, it has become a hill on which political careers go to die. Case in point: People's Party Leader Maxime Bernier, whose ambition to lead the Conservative party in 2017 was thwarted by the Quebec dairy lobby after he promised to ditch the policy. And the sacred cow lives on: in June, the House of Commons and Senate passed a Bloc Québécois bill with all-party support to prevent bargaining supply management away. Carney knows that he owes his recent election victory in large part to Quebec voters — and with a minority, needs the support of opposition parties like the Bloc to stay in power. But if Canada wants a serious trade deal with a Trump White House, supply management will have to go. Not just for the sake of negotiations, but because it's a cartel policy that has had its day. The economic case against supply management is straightforward. A study by the Montreal Economic Institute estimates that by limiting Canadian production, the average family pays hundreds more annually for milk, cheese and eggs, compared to countries without such a quota system. The Macdonald-Laurier Institute found that these inflated prices protect a tiny number of producers, mostly large, established farms with valuable quotas, at the expense of millions of Canadians and would-be producers who can't afford to break into the market. It's the worst kind of protectionism: one that punishes the poor, rewards the entrenched and chokes competition. Carney faces the same dilemma as Bernier, in reverse: will he let trade dreams die on this hill? Will he jeopardize our steel, aluminum and auto sectors, as well as deals for critical minerals, for a policy that makes it harder for Canadian families to afford milk for their kids? If Carney is serious about leading this country and these talks, he must put the national interest ahead of political orthodoxy. As this weekend showed, Trump will not hesitate to call Canada's bluff. The Americans want the big cheese — and they'll hold everything else hostage until they get it.
a day ago
- Business
Ottawa avoided a trade setback. But Trump could come for supply management next
Dreams do come true. U.S. President Donald Trump wished for Canada's tax on U.S. tech companies to disappear on Friday, and by Sunday, it had (new window) . Mostly, there was a sense of surprise that the federal government would play such a valuable card this soon. The digital services tax (DST), which Ottawa was supposed to start collecting on Monday, was unpopular with the U.S. government and the tech giants it targeted — Meta and Amazon, for example — and, conveniently, was not especially liked by business groups (new window) at home. By quashing it, Canadian negotiators paid a kind of toll on the road to a trade deal with the U.S. — in that it kept talks rolling. But the move could back Canada against the wall on the far thornier issue of supply management. I think we can expect that they will be coming after us on [supply management] as well, because it has been a longstanding irritant, said Fen Hampson, a professor of international affairs and a co-chair of the expert group on Canada-U.S. relations at Carleton University in Ottawa. Trump has long objected to (new window) Canada's supply-managed dairy system, complaining about what he characterizes as high tariff rates on U.S. dairy exports to Canada (more on that later). He made it an issue leading up to the 2018 negotiation of the Canada-U.S.-Mexico Agreement (CUSMA), but ultimately allowed that free trade deal to pass without addressing it. Now, Trump is back to making a stink about our cheese. He claimed on Friday that Canada has charged U.S. farmers a 400 per cent tariff for years on dairy products. WATCH | Why Trump hates dairy supply management: Début du widget Widget. Passer le widget ? Fin du widget Widget. Retourner au début du widget ? How Canada's dairy supply management system works — and why Trump hates it Donald Trump is not a fan of Canada's dairy supply management system — repeatedly attacking it in his first term and going after it again as he prepares to return to the White House. CBC's Ellen Mauro meets concerned Canadian dairy farmers and explains why the system has the U.S. president-elect so riled up. But when it comes to dairy, Trump's wish won't come true so easily, thanks to the recently passed Bill C-202, which forbids supply management from being used as a bargaining chip in trade negotiations. The bill has been criticized because it potentially ties Ottawa's hands if the U.S. president issues an ultimatum aimed at Canadian dairy — by extension, threatening to disturb Parliament which has, since the federal election, mostly set aside partisan differences in the face of Trump's threats. The added difficulty has certainly registered with the White House, said Hampson. 'Tremendous' power Down south, the scrapped DST was hailed as a victory. Trump's trade representative Howard Lutnick thanked Canada for removing it, calling it a deal-breaker for any trade deal with the United States, while White House economic adviser Kevin Hassett said removing the tax paved the way for to renew talks. White House press secretary Karoline Leavitt seemed to gloat, saying that Carney caved to Trump's demands and that it was a mistake for Canada to promise the tax in the first place. WATCH | Carney says negotiations restarted: Début du widget Widget. Passer le widget ? Fin du widget Widget. Retourner au début du widget ? Canada and U.S. restarted negotiations Monday morning, Carney says Prime Minister Mark Carney says he had a 'good' conversation with U.S. President Donald Trump on Sunday, and that the two leaders will keep working to reach a deal by July 21. The federal government scrapped the digital services tax over the weekend after Trump paused all trade talks. But if there was any indication of what's to come next, it was from Pete Hoekstra. The U.S. ambassador to Canada, speaking on CBC's Power & Politics on Monday evening, said he believes Carney would push Parliament to put supply management back on the table if a deal between the U.S. and Canada depended on it. I have a strong belief that if ... the prime minister and the president got to a trade agreement, and for whatever reason it included something that Parliament said 'You can't do that,' the prime minister probably could find a way to get Parliament to do [his] will, he said. Prime ministers and presidents, they've got a tremendous amount of power. If Trump really wanted to put economic pressure on Canada, he could try this exact same tactic and say, 'I'm going to walk away until supply management is gone,' said Asa McKercher, a professor at the Mulroney Institute at St. Francis Xavier University in Antigonish, N.S. Trump's numerous claims about Canada's supply managed dairy systems are frequently inaccurate. High tariff rates on U.S. dairy only apply if exports exceed set quotas, and the U.S. has never come close to exceeding them (one U.S. dairy lobbying organization argues that this is because of the "protectionist measures (new window) " imposed by Canada). Below the quotas, U.S. dairy products are tariff-free under CUSMA. While Canada's dairy lobby welcomed (new window) C-202's passage, some agricultural industry leaders (new window) argue that it stifles their industries in favour of bolstering dairy, and gives the country little wiggle room (new window) should Trump come knocking for more concessions. I think the Carney government is now getting into a position where the rubber is really going to hit the road, said McKercher. If you've given in on the digital tax, is that a concession that Mr. Trump will see as a concession and accept, or will Mr. Trump continue to push Canada and say, well, now what about supply management? WATCH | Supply management 'off the table,' says Leblanc: Début du widget Widget. Passer le widget ? Fin du widget Widget. Retourner au début du widget ? Canada's dairy supply management 'not negotiable' in trade war with U.S.: LeBlanc Chief political correspondent Rosemary Barton speaks with Finance Minister Dominic LeBlanc about Canada's response to the trade war started by U.S. President Donald Trump. Plus, B.C. Premier David Eby on how his province is driving efforts to buy Canadian, and the Sunday Scrum discusses what it all means for Canadian politics. 'Existential' issue for Liberals He says this is dangerous territory, for the minority Carney government, which needs the support of other parties to pass its agenda. If the current government looks like it's going to introduce a bill threatening supply management, this could create a lot of political headaches. Bill C-202 was sponsored by Bloc Québécois Leader Yves-François Blanchet as a nod to the party's base in Quebec where the dairy farming industry is heavily concentrated. The Conservatives are also looking to expand in the province, while maintaining their rural base in Ontario. This is where the issue becomes existential for the political fortunes of Carney's Liberal government, said Hampson. So that's going to be a tough one. And I'm not sure there's really any way to square that circle if the Americans decide to go after us on it. Trade talks with U.S. resumed on Monday morning, says Carney (new window) With three weeks left until the July 21 deadline for a new Canada-U.S. trade deal, it's possible that talks between Trump and Carney will reach the finish line, says Lori Turnbull, a professor of political science at Dalhousie University. But with Trump upset about supply management, it's a question of is this going to be enough for him for a little while? How long? she said. Now that we've made a concession and Trump sees that as a win for him, is there an opportunity right now in this short period of time [where Canada can] move some things through where Trump feels like … a real free trade relationship and a new economic and security pact for Canada and the US is in the American's interest too. Jenna Benchetrit (new window) · CBC News
Calgary Herald
2 days ago
- Business
- Calgary Herald
Tasha Kheiriddin: Carney will have no choice but to kill supply management
Article content For a while there, things were going so well. Prime Minister Mark Carney — aka 'the Trump whisperer' — had morphed from critic to texting buddy of the U.S. President. Over the past three months, Carney had been chatting with Donald Trump, building backchannel goodwill. After the successful G7 summit in Kananaskis, Alta., hopes were high that Ottawa would strike a deal with Washington in 30 days, and that the rhetoric of making us the '51st state' had finally been retired. Article content Article content Until last Friday, when everything fell apart. Article content Article content Article content That's when President Trump abruptly cut off trade negotiations with Canada over our three per cent digital services tax, set to take effect June 30. Aimed at U.S. tech giants Amazon, Meta, Google and AirBNB, the tax was retroactive to 2022 and would have cost them an estimated $2 billion in back payments. The tech bros howled, the president barked, and Carney blinked. Sunday night, he backed down and cancelled the tax: Monday morning, U.S. Commerce Secretary Howard Lutnick thanked him for the climbdown, as did the Canadian Chamber of Commerce. Negotiations were back on. Article content But if you thought that was the last bump in the road, you couldn't be more wrong. In an interview broadcast Sunday morning on Fox, Trump mentioned a veritable mountain: supply management. That's the system that protects Canadian dairy, poultry and egg industries from foreign competition through quotas and tariffs, including Trump's favourite bugaboo, a 200-plus per cent markup on U.S. dairy products. Article content Article content It's true that the tariff only kicks in after the U.S. exports 50,000 zero-tariff metric tons of milk and 12,500 metric tons of cheese per year — levels it is nowhere near approaching. But supply management was already a sticking point with Trump in the CUSMA negotiations under Prime Minister Justin Trudeau, and Republican lawmakers and U.S. dairy producers continue to demand its elimination. Article content Article content In our country, unfortunately, it has become a hill on which political careers go to die. Case in point: People's Party Leader Maxime Bernier, whose ambition to lead the Conservative party in 2017 was thwarted by the Quebec dairy lobby after he promised to ditch the policy. And the sacred cow lives on: in June, the House of Commons and Senate passed a Bloc Québécois bill with all-party support to prevent bargaining supply management away. Article content Carney knows that he owes his recent election victory in large part to Quebec voters — and with a minority, needs the support of opposition parties like the Bloc to stay in power. But if Canada wants a serious trade deal with a Trump White House, supply management will have to go. Not just for the sake of negotiations, but because it's a cartel policy that has had its day.
Yahoo
7 days ago
- Business
- Yahoo
Trump's tariff war: Canada expected to keep NAFTA 2.0 'carve-out' in new U.S. trade deal
A new Canada-U.S. trade deal will likely carry forward the Canada-United States-Mexico Agreement (CUSMA) tariff exemptions shielding most Canadian exports from American tariffs today, says Deloitte Canada chief economist Dawn Desjardins. She's optimistic that Canada can avoid the economic hit that may be in store for other U.S. trading partners. U.S. President Donald Trump has set July 9 as the deadline for countries to ink a trade deal in order to avoid his 'Liberation Day' tariffs, many of which are higher than the baseline 10 per cent levy the White House has applied to most countries. For Canada, Prime Minister Mark Carney and Trump agreed on the sidelines of the recent G7 meeting in Alberta to strike a deal by July 21. 'Our baseline view assumes that at a minimum, we continue to operate with our CUSMA carve-outs. Meaning, the vast majority of Canadian goods that we sell into the U.S. will continue to be tariff-free,' Desjardins told Yahoo Finance Canada in an interview earlier this week. 'The sounds we're hearing seem to be moving in the right direction. Obviously, [I have] no inside information. It's just an assumption that we will not be severely hit by 25 per cent tariffs across the board.' While Trump has ramped up tariffs on Canadian steel and aluminum, as well as the auto sector, economists say Canada achieved the lowest U.S. tariff rate among major trade partners when CUSMA-compliant goods were exempted on April 2. On Wednesday, RBC Economics estimated that roughly 86 per cent of Canadian exports should ultimately be able to access the U.S. market duty free under current trade rules. RBC expects the share of CUSMA-compliant trade to rise rapidly from 50 per cent in March. Trump signed CUSMA, also known as United States-Mexico-Canada Agreement, into U.S. law on Jan. 29, 2020. The deal was dubbed 'NAFTA 2.0' or 'New NAFTA,' as it replaced the North American Free Trade Agreement implemented in 1994. 'I'm a little surprised that we were already front and centre in terms of the initial tariffs being applied to Canada, given that we have that trade agreement,' Desjardins said. 'The element of trust that we have with our biggest trading partner has been quite damaged by this.' Deloitte Canada's latest economic forecast, published on Wednesday, calls for that damage to result in a 'modest recession' in the second and third quarters of the year. Ontario and Quebec are due to be hardest hit, given their weight in the manufacturing sector. Statistics Canada's latest GDP reading shows the economy grew at an annual rate of 2.2 per cent in the first quarter. Earlier this month, the Bank of Canada warned the economy will be "substantially weaker" in the second quarter of 2025, versus the start of the year as the full impact of U.S. import tariffs hits Canadian businesses. Deloitte sees Canada's real GDP growth rising 1.1 per cent in 2025, before accelerating to 1.6 per cent in 2026. 'As we move forward, and we have more clarity, whatever clarity looks like, but more clarity on our relationship with the U.S., and how the [Canadian] government is actually going to get into action, these are going to be the things that lift us as we go into 2026,' Desjardins said. Canadians will have to wait until the federal government's fall budget for more details on Carney's plans to spend billions on building housing inventory, advancing infrastructure projects, and investing in Canada's military. 'There's a lot in the hopper,' Desjardins added. 'There are just so many underlying factors at this stage that could have either a temporary or short-term impact, or be more persistent.' Deloitte Canada's optimistic take on rebuilding Canada-U.S. trade links comes on the heels of a similar analysis by the Canadian arm of fellow accounting giant PricewaterhouseCoopers (PwC) released last week. 'Canada is maybe in the best position of any other country,' Michael Dobner, PwC Canada's national leader of economics and policy practice, told Yahoo Finance Canada last Tuesday. 'The negotiation between Canada and the U.S. may further cement Canada's position over other countries as an exporter to the U.S.' Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on X @jefflagerquist. Download the Yahoo Finance app, available for Apple and Android. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CTV News
7 days ago
- Business
- CTV News
Windsor Chamber weighs in on recession warning, rising unemployment
With new forecasts predicting a mild recession for Canada later this year, Windsor business leaders are keeping a close eye on how things might play out here at home. Deloitte Canada and the Royal Bank of Canada both released reports this week suggesting the country could avoid the worst-case economic fallout from the current trade tensions with the U.S. — though some short-term pain is still expected. 'We do think the economy really is going to be considerably slower,' said Dawn Desjardins, chief economist at Deloitte Canada. The Windsor-Essex Chamber of Commerce said that slowdown has already been felt locally, especially since tariff concerns started to dominate headlines earlier this year. 'It does highlight that there is the uncertainty that's continuing to exist in the Canadian economy,' said Chamber President and CEO Ryan Donally. 'That uncertainty we've been feeling in Windsor-Essex probably since late January, early February, when this tariff issue started to rear its ugly head.' Donally said there have been some layoffs in Windsor's manufacturing sector, but not as widespread as originally feared. 'One of the key things that has maintained some of the stability here in Windsor-Essex is the fact that products underneath the CUSMA (the Canada-United States-Mexico Agreement) relationship between Canada [and the U.S.] have still been able to move freely across the border,' he said. 'That's been, let's call it, a bit of a saving grace.' Unemployment steady — but high Windsor's unemployment rate sits at 10.8 per cent — the highest in Canada. But Donally said even that shows some signs of resilience. 'When I reflected on that, I think it's actually perhaps a little bit better than I thought it may come in,' he said. 'Recognizing that it is a three-month moving average for unemployment in our region... It encapsulates essentially the months that have been part of this trade tariff war.' 'I don't want to say it's a silver lining because it still is near the top in Canada — if not the top — but if we can weather this storm and we can maintain that type of unemployment rate… I think come fall, we're probably in a much better spot.' A slower summer — then a bounce-back? Donally said manufacturers on the Chamber's trade task force expect a quiet summer but are optimistic for what's next. 'They did identify that it might be a bit of a slow summer, a bit of a lean summer,' he said. 'But they did expect that fall would perhaps ramp back up.' He added: 'There is this pent-up demand in the market. 'It's not that Windsor has been necessarily hit harder than all areas — the whole manufacturing sector has really slowed down globally. But cars still need to be built, and cars still need to be purchased.' Looking ahead, Donally said Windsor's large-scale projects — including the Gordie Howe International Bridge, the new acute care hospital and the NextStar EV battery plant — could put the region in a strong position for recovery. 'If we do manage to get through this and we don't hear that R-word... I think it positions this entire economy to do extremely well coming out of it,' he said.
